Description
This is a presentation explains on basics of supply chain management. It covers all the primary concepts of SCM.
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
1
A supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then final products, and deliver the products to customers through a distribution system (Lee and Billington )
A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. (Ganeshan and Harrison 19)
2
Supply chain management deals with the management of materials, information and financial flows in a network consisting of suppliers, manufacturers, distributors, and customers (Stanford Supply Chain Forum, 1999)
The definition -American professional association (APICS) “Supply Chain Management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers”
3
upstream
downstream
4
Design Source Negotiate Buy Make Move Store Service Fulfill Sell Market
5
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
6
Excess Inventory costs
Excess freight charges
Lost sales / Stock outages Wasted time and energy Extra staff Customer dissatisfaction Capital costs Real Estate Costs Manufacturing Costs Globalization
7
?
Core Organizational Priorities
? ? ? ? ? ? Cost reduction Organizational growth and survival Creation of new markets Improved customer service Reduced cycle time Increased inventory turnover
?
Key problems with current SCs
? Un-integrated operations inside own organizations ? Weak IT infrastructure outside own organizations ? Differing operating practices between own organization and vendors/ customers ? Impact of global players on the industry
8
?
Lack of Supply Chain integration
? Generally very few firms have either tightly coupled or completely loosely defined supply chain relationships. ? Push Pull strategy is therefore common. ? Greater degree of coupling with suppliers compared with retailers and distributors.
?
Lack of penetration of IT Systems in SC operations
? CBS are mostly used for financial and accounting purposes. Purchasing and sales functions come next. The use is rather low for logistics and warehousing functions. ? Use of e- mail is very common to communicate with other organizations. Use of EDI is rather low.
9
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
10
Complex In-House Manageable 1993 1980 1970 1950 JIT
2000
Simple
Material requirement Planning Inbound/ outbound Inventory flow
Advance Actual Planning, SCM Web enabled Globalizatio n
Outsource
SaaS
11
?
The NET:
? Predetermined pricing is replaced by auction based price bidding. ? Sourcing is becoming global as suppliers all over the world sell on the NET. ? Long term partnerships with vendors are replaced by deal based relationships. ? Buyers compete with one another to secure the best and cheapest suppliers.
?
The STRATEGY :
? Increasing customization requires versatile suppliers. ? Competitive strategy requires the supply chain has to be fast and flexible. ? Firms in mature markets build long supply chains and brand the product. ? Companies that compete on cost, pick suppliers on the basis of price.
12
E-ENVIRONMENT
Functions
Logistics Sourcing Procurement Supply Networ k
Supply Chain
JIT Movement Tracking Capability Shipping Accuracy
13
The 4 R’s of SCM
• • • • Right products Right quantities Right place Right moment … at minimal cost.
14
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
15
Information Product
Customer
Funds
16
Supply side second-tier suppliers first-tier suppliers
Demand side first-tier customers second-tier customers
Company B
Company C
X X
X X X
For Company A Internal supply network Immediate supply network Total supply network
17
Down stream
Up stream
? ? ?
Raw materials enter into a manufacturing organization via a supply system and are transformed into finished goods. Finished goods are then supplied to the consumers through a distribution system. Several companies linked together in the process, each adding value to the product as it moves through the supply chain.
18
Information Flow
Products or services usually flow from supplier to customer. Design and demand information usually flow from customer to supplier.
19
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
20
Where to produce & assemble goods? How much to produce? When to produce?
Where to store finished goods? Where to store spare parts? How much to store? How to retrieve from storage?
Customer
Manufacture
Warehouse
Customer What markets to serve? What level of service? What level of service cost? Customer
Supplier
Where to acquire
Manufacture
Warehouse
Customer
How much to ship? When to ship? What modes of transportation?
21
materials components?
What fleet size? What vehicle routes? What shipment size?
Strategize
location
Produc tMix
……
Months / Years
Plan
Production
Supply Demand Match
…..
Days/ Weeks Hours/ Minute s
Execute
Pick Pack Ship Deliver
Replenishments
…..
Collaborate Monitor Control
22
?
Decisions about the structure of the SC and what processes each stage will perform
? ?
Strategic SC decisions ? Facilities - Locations and capacities ? Inventory made or stored at various locations ? Transportation Modes ? Information systems
SC design must support strategic objectives SC design decisions are long-term and expensive to reverse – must take into account market uncertainty
?
?
23
?
How do we achieve Corporate Strategic Goals Start with a forecast of demand in the coming year Planning/Policy decisions: ? Which markets will be supplied from which locations? ? Planned buildup of inventories ? Subcontracting, backup locations ? Inventory policies ? Timing and size of market promotions Must consider in demand uncertainty, exchange rates, competition over the time horizon
?
?
?
?
24
?
Time horizon is weekly or daily Decisions regarding individual customer orders SC structure and operating policies are determined Goal is to implement the operating policies as effectively as possible Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders Much less uncertainty (short time horizon)
25
?
?
?
?
?
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
26
?
Cycle view: processes in a supply chain are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages
Push/pull view: processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push)
?
27
Customer
Customer Order Cycle
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier
28
?
Each cycle occurs at the interface between two stages Customer order cycle (customer-retailer) Replenishment cycle (retailer-distributor) Manufacturing cycle (distributor-manufacturer) Procurement cycle (manufacturer-supplier) Cycle view defines processes involved, the owners of each process. Specifies the roles and responsibilities of each member and the desired outcome of each process.
?
?
?
?
?
?
29
?
Involves all processes directly involved in receiving and filling the customer’s order
Customer arrival Customer order entry Customer order fulfillment Customer order receiving
?
?
?
?
30
Customer Arrival
Customer Order Receiving
Customer Order Entry
Customer Order Fulfillment
31
?
All processes involved in replenishing retailer inventories (retailer is now the customer)
?
Retail order trigger
Retail order entry
?
?
Retail order fulfillment
Retail order receiving
?
32
Retail Order Trigger
Retail Order Receiving
Retail Order Entry
Retail Order Fulfillment
33
?
All processes involved in replenishing distributor (or retailer) inventory
Order arrival from the distributor, retailer, or customer Production scheduling Manufacturing and shipping Receiving at the distributor, retailer, or customer
?
?
?
?
34
Order Arrival
Receiving
Production Scheduling
Manufacturing and Shipping
35
?
All processes necessary to ensure that materials are available according to schedule Manufacturer orders components from suppliers to replenish component inventories However, component orders can be determined precisely from production schedules (different from retailer/distributor orders that are based on uncertain customer demand) Important that suppliers be linked to the manufacturer’s production schedule
?
?
?
36
Procurement, Manufacturing and
Customer Order Cycle
Replenishment cycles
PUSH PROCESSES
PULL PROCESSES
Customer Order Arrives
37
A push / pull view of the Supply Chain categorizes processes based on whether they are initiated in response to a customer order ( pull ) or in anticipation of a customer order ( push ). This view is very useful when considering strategic decisions relating to supply chain design. Customer Pull Process Customer order
?
cycle
Customer order arrives
Replenishment, Manufacturing Procurement cycles
Push Process
Manufacturer
Supplier
38
Pull Process Customer order& manufacturing cycle Customer
Customer order arrives
Manufacturer ( Dell )
Procurement cycle Push Process
Supplier
Dell Company Supply Chain
39
?
Supply chain processes fall into push or pull depending on times of execution and customer demand Pull: execution is initiated in response to a customer order (reactive) – Made or Assembled to Order Push: execution is initiated in anticipation of customer orders (speculative) – Made or Assemble to Stock Push/pull boundary separates push processes from pull processes
?
?
?
40
?
P/P are strategic decisions of SC design – a global view of how SC processes relate to customer orders Can combine the push/pull and cycle views The relative proportion of push and pull processes often impact supply chain performance
?
?
41
?
Production decisions based on long-term forecasts
?
Ordering decisions based on inventory & forecasts
What are the problems with push strategies?
? Inability to meet changing demand patterns ? Obsolescence ? The bullwhip effect:
? Excessive inventory ? Excessive production variability ? Poor service levels
?
? Hard to predict production capacity or transportation capacity
42
?
Production is demand driven
? Production and distribution coordinated with true customer demand ? Firms respond to specific orders
?
Pull Strategies result in:
? ? ? ?
Reduced lead times (better anticipation) Decreased inventory levels at retailers and manufacturers Decreased system variability Better response to changing markets
?
But:
? Harder to leverage economies of scale ? Doesn’t work in all cases
43
PushPull Boundary
Push Strategy Raw Materials
Pull Strategy End Customer
Supply chain time line
44
?
A shift from a Push System... …to a Push-Pull System
? Production decisions are based on forecast
?
? Initial portion of the supply chain is replenished based on long-term forecasts ? Final supply chain stages based on actual customer demand.
? For example, parts inventory may be replenished based on forecasts
? For example, assembly may based on actual orders.
45
?
?
Build to Stock ? Forecast demand ? Buys components ? Assembles computers ? Observes demand and meets demand if possible. A traditional push system
?
?
Build to order ? Forecast demand ? Buys components ? Observes demand ? Assembles computers ? Meets demand A push-pull system
46
Demand uncertainty
Pull
H
I Computers
II Furniture
Push
L L
IV Books & CDs
III Grocery
H
Delivery cost Unit price Economies of Scale
Pull
Push
47
?
Higher demand uncertainty suggests pull
Higher importance of economies of scale suggests push High uncertainty/ EOS not important such as the computer industry implies pull Low uncertainty/ EOS important such as groceries implies push ? Demand is stable ? Transportation cost reduction is critical ? Pull would not be appropriate here.
?
?
?
48
?
Low uncertainty but low value of economies of scale (high volume books and CDs) ? Either push strategies or push/pull strategies might be most appropriate High uncertainty and high value of economies of scale ? For example, the furniture industry ? How can production be pull but delivery push? ? Is this a “pull-push” system?
?
49
Push
Pull
Objective
Complexity
Minimize cost
High
Maximize service level
Low
Focus
Lead time Processes
Resource allocation
Long Supply chain planning
Responsiveness
Short Order fulfillment
50
?
The push section: ? Uncertainty is relatively low ? Economies of scale important ? Long lead times ? Complex supply chain structures:
Thus ? Management based on forecasts is appropriate ? Focus is on cost minimization ? Achieved by effective resource utilization – supply chain optimization
?
51
?
?
The pull section: ? High uncertainty ? Simple supply chain structure ? Short lead times Thus ? Reacting to realized demand is important ? Focus on service level ? Flexible and responsive approaches
52
?
The push section requires: ? Supply chain planning ? Long term strategies
The pull section requires: ? Order fulfillment processes ? Customer relationship management Buffer inventory at the boundaries: ? The output of the tactical planning process ? The input to the order fulfillment process.
?
?
53
54
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends i & SCM help
55
• Increased levels of outsourcing – Multiple levels of outsourcing • Increased focus on customer intimacy – Proliferation of VMI/SMI/CMI programs • Increased focus on Tactical and Business planning – Higher value add planning processes • Increased focus on the complete value chain – More collaboration between strategic customers and suppliers • Demand shaping based on business strategy, manufacturing constraints, and inventory – Demand creation based on intelligent pricing tied to availability • Increased focus on CRD performance improvement – To maintain/increase market share • Tighter coupling between planning and execution – Exception based intervention in execution of plans
56
Issue
Extensive Capital Investment
Industry Response
Maximize capacity/equipment utilization across business divisions. Optimize profits based on product mix. Increased outsourcing.
SCM systems can do
Strategic Corporate Planning. Good procurement system Profit Optimization.
Increasing customer demands
Instant response to requests. Perfect delivery.
Integrated Planning & Fulfillment. Interactive delivery quoting.
Shrinking product life cycles
Shorter lead times and faster time to market. Reduce excess/obsolete Inventory.
Inventory planning.
57
Issue
Demand variability
Industry Response
Increased forecast accuracy Carefully managed response buffers Global penetration Cost effective operations Customer satisfaction
SCM Systems Can Do
Integrated Value Chain Planning.
Intense competition
Integrated Value Chain Planning. Customer Program Management. Inventory planning.
Long manufacturing cycle times
Strategic positioning of inventory along the supply chain
58
• Design and validate your supply chain strategy before you deploy – define scope and scale • Collaborate on demand and gain consensus for the most accurate forecast – execution • Collaborate, optimize, monitor and control, production, inventory, distribution and transportation simultaneously across multiple enterprises – global optimization • Execute, monitor, and review your SCM performance carefully with predefined KPI and objectives – operations evaluation
59
doc_542697986.pptx
This is a presentation explains on basics of supply chain management. It covers all the primary concepts of SCM.
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
1
A supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then final products, and deliver the products to customers through a distribution system (Lee and Billington )
A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. (Ganeshan and Harrison 19)
2
Supply chain management deals with the management of materials, information and financial flows in a network consisting of suppliers, manufacturers, distributors, and customers (Stanford Supply Chain Forum, 1999)
The definition -American professional association (APICS) “Supply Chain Management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers”
3
upstream
downstream
4
Design Source Negotiate Buy Make Move Store Service Fulfill Sell Market
5
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
6
Excess Inventory costs
Excess freight charges
Lost sales / Stock outages Wasted time and energy Extra staff Customer dissatisfaction Capital costs Real Estate Costs Manufacturing Costs Globalization
7
?
Core Organizational Priorities
? ? ? ? ? ? Cost reduction Organizational growth and survival Creation of new markets Improved customer service Reduced cycle time Increased inventory turnover
?
Key problems with current SCs
? Un-integrated operations inside own organizations ? Weak IT infrastructure outside own organizations ? Differing operating practices between own organization and vendors/ customers ? Impact of global players on the industry
8
?
Lack of Supply Chain integration
? Generally very few firms have either tightly coupled or completely loosely defined supply chain relationships. ? Push Pull strategy is therefore common. ? Greater degree of coupling with suppliers compared with retailers and distributors.
?
Lack of penetration of IT Systems in SC operations
? CBS are mostly used for financial and accounting purposes. Purchasing and sales functions come next. The use is rather low for logistics and warehousing functions. ? Use of e- mail is very common to communicate with other organizations. Use of EDI is rather low.
9
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
10
Complex In-House Manageable 1993 1980 1970 1950 JIT
2000
Simple
Material requirement Planning Inbound/ outbound Inventory flow
Advance Actual Planning, SCM Web enabled Globalizatio n
Outsource
SaaS
11
?
The NET:
? Predetermined pricing is replaced by auction based price bidding. ? Sourcing is becoming global as suppliers all over the world sell on the NET. ? Long term partnerships with vendors are replaced by deal based relationships. ? Buyers compete with one another to secure the best and cheapest suppliers.
?
The STRATEGY :
? Increasing customization requires versatile suppliers. ? Competitive strategy requires the supply chain has to be fast and flexible. ? Firms in mature markets build long supply chains and brand the product. ? Companies that compete on cost, pick suppliers on the basis of price.
12
E-ENVIRONMENT
Functions
Logistics Sourcing Procurement Supply Networ k
Supply Chain
JIT Movement Tracking Capability Shipping Accuracy
13
The 4 R’s of SCM
• • • • Right products Right quantities Right place Right moment … at minimal cost.
14
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
15
Information Product
Customer
Funds
16
Supply side second-tier suppliers first-tier suppliers
Demand side first-tier customers second-tier customers
Company B
Company C
X X
X X X
For Company A Internal supply network Immediate supply network Total supply network
17
Down stream
Up stream
? ? ?
Raw materials enter into a manufacturing organization via a supply system and are transformed into finished goods. Finished goods are then supplied to the consumers through a distribution system. Several companies linked together in the process, each adding value to the product as it moves through the supply chain.
18
Information Flow
Products or services usually flow from supplier to customer. Design and demand information usually flow from customer to supplier.
19
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
20
Where to produce & assemble goods? How much to produce? When to produce?
Where to store finished goods? Where to store spare parts? How much to store? How to retrieve from storage?
Customer
Manufacture
Warehouse
Customer What markets to serve? What level of service? What level of service cost? Customer
Supplier
Where to acquire
Manufacture
Warehouse
Customer
How much to ship? When to ship? What modes of transportation?
21
materials components?
What fleet size? What vehicle routes? What shipment size?
Strategize
location
Produc tMix
……
Months / Years
Plan
Production
Supply Demand Match
…..
Days/ Weeks Hours/ Minute s
Execute
Pick Pack Ship Deliver
Replenishments
…..
Collaborate Monitor Control
22
?
Decisions about the structure of the SC and what processes each stage will perform
? ?
Strategic SC decisions ? Facilities - Locations and capacities ? Inventory made or stored at various locations ? Transportation Modes ? Information systems
SC design must support strategic objectives SC design decisions are long-term and expensive to reverse – must take into account market uncertainty
?
?
23
?
How do we achieve Corporate Strategic Goals Start with a forecast of demand in the coming year Planning/Policy decisions: ? Which markets will be supplied from which locations? ? Planned buildup of inventories ? Subcontracting, backup locations ? Inventory policies ? Timing and size of market promotions Must consider in demand uncertainty, exchange rates, competition over the time horizon
?
?
?
?
24
?
Time horizon is weekly or daily Decisions regarding individual customer orders SC structure and operating policies are determined Goal is to implement the operating policies as effectively as possible Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders Much less uncertainty (short time horizon)
25
?
?
?
?
?
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends in Semiconductor & SCM help
26
?
Cycle view: processes in a supply chain are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages
Push/pull view: processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push)
?
27
Customer
Customer Order Cycle
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier
28
?
Each cycle occurs at the interface between two stages Customer order cycle (customer-retailer) Replenishment cycle (retailer-distributor) Manufacturing cycle (distributor-manufacturer) Procurement cycle (manufacturer-supplier) Cycle view defines processes involved, the owners of each process. Specifies the roles and responsibilities of each member and the desired outcome of each process.
?
?
?
?
?
?
29
?
Involves all processes directly involved in receiving and filling the customer’s order
Customer arrival Customer order entry Customer order fulfillment Customer order receiving
?
?
?
?
30
Customer Arrival
Customer Order Receiving
Customer Order Entry
Customer Order Fulfillment
31
?
All processes involved in replenishing retailer inventories (retailer is now the customer)
?
Retail order trigger
Retail order entry
?
?
Retail order fulfillment
Retail order receiving
?
32
Retail Order Trigger
Retail Order Receiving
Retail Order Entry
Retail Order Fulfillment
33
?
All processes involved in replenishing distributor (or retailer) inventory
Order arrival from the distributor, retailer, or customer Production scheduling Manufacturing and shipping Receiving at the distributor, retailer, or customer
?
?
?
?
34
Order Arrival
Receiving
Production Scheduling
Manufacturing and Shipping
35
?
All processes necessary to ensure that materials are available according to schedule Manufacturer orders components from suppliers to replenish component inventories However, component orders can be determined precisely from production schedules (different from retailer/distributor orders that are based on uncertain customer demand) Important that suppliers be linked to the manufacturer’s production schedule
?
?
?
36
Procurement, Manufacturing and
Customer Order Cycle
Replenishment cycles
PUSH PROCESSES
PULL PROCESSES
Customer Order Arrives
37
A push / pull view of the Supply Chain categorizes processes based on whether they are initiated in response to a customer order ( pull ) or in anticipation of a customer order ( push ). This view is very useful when considering strategic decisions relating to supply chain design. Customer Pull Process Customer order
?
cycle
Customer order arrives
Replenishment, Manufacturing Procurement cycles
Push Process
Manufacturer
Supplier
38
Pull Process Customer order& manufacturing cycle Customer
Customer order arrives
Manufacturer ( Dell )
Procurement cycle Push Process
Supplier
Dell Company Supply Chain
39
?
Supply chain processes fall into push or pull depending on times of execution and customer demand Pull: execution is initiated in response to a customer order (reactive) – Made or Assembled to Order Push: execution is initiated in anticipation of customer orders (speculative) – Made or Assemble to Stock Push/pull boundary separates push processes from pull processes
?
?
?
40
?
P/P are strategic decisions of SC design – a global view of how SC processes relate to customer orders Can combine the push/pull and cycle views The relative proportion of push and pull processes often impact supply chain performance
?
?
41
?
Production decisions based on long-term forecasts
?
Ordering decisions based on inventory & forecasts
What are the problems with push strategies?
? Inability to meet changing demand patterns ? Obsolescence ? The bullwhip effect:
? Excessive inventory ? Excessive production variability ? Poor service levels
?
? Hard to predict production capacity or transportation capacity
42
?
Production is demand driven
? Production and distribution coordinated with true customer demand ? Firms respond to specific orders
?
Pull Strategies result in:
? ? ? ?
Reduced lead times (better anticipation) Decreased inventory levels at retailers and manufacturers Decreased system variability Better response to changing markets
?
But:
? Harder to leverage economies of scale ? Doesn’t work in all cases
43
PushPull Boundary
Push Strategy Raw Materials
Pull Strategy End Customer
Supply chain time line
44
?
A shift from a Push System... …to a Push-Pull System
? Production decisions are based on forecast
?
? Initial portion of the supply chain is replenished based on long-term forecasts ? Final supply chain stages based on actual customer demand.
? For example, parts inventory may be replenished based on forecasts
? For example, assembly may based on actual orders.
45
?
?
Build to Stock ? Forecast demand ? Buys components ? Assembles computers ? Observes demand and meets demand if possible. A traditional push system
?
?
Build to order ? Forecast demand ? Buys components ? Observes demand ? Assembles computers ? Meets demand A push-pull system
46
Demand uncertainty
Pull
H
I Computers
II Furniture
Push
L L
IV Books & CDs
III Grocery
H
Delivery cost Unit price Economies of Scale
Pull
Push
47
?
Higher demand uncertainty suggests pull
Higher importance of economies of scale suggests push High uncertainty/ EOS not important such as the computer industry implies pull Low uncertainty/ EOS important such as groceries implies push ? Demand is stable ? Transportation cost reduction is critical ? Pull would not be appropriate here.
?
?
?
48
?
Low uncertainty but low value of economies of scale (high volume books and CDs) ? Either push strategies or push/pull strategies might be most appropriate High uncertainty and high value of economies of scale ? For example, the furniture industry ? How can production be pull but delivery push? ? Is this a “pull-push” system?
?
49
Push
Pull
Objective
Complexity
Minimize cost
High
Maximize service level
Low
Focus
Lead time Processes
Resource allocation
Long Supply chain planning
Responsiveness
Short Order fulfillment
50
?
The push section: ? Uncertainty is relatively low ? Economies of scale important ? Long lead times ? Complex supply chain structures:
Thus ? Management based on forecasts is appropriate ? Focus is on cost minimization ? Achieved by effective resource utilization – supply chain optimization
?
51
?
?
The pull section: ? High uncertainty ? Simple supply chain structure ? Short lead times Thus ? Reacting to realized demand is important ? Focus on service level ? Flexible and responsive approaches
52
?
The push section requires: ? Supply chain planning ? Long term strategies
The pull section requires: ? Order fulfillment processes ? Customer relationship management Buffer inventory at the boundaries: ? The output of the tactical planning process ? The input to the order fulfillment process.
?
?
53
54
Agenda
What is Supply Chain and Supply Chain Management Why is SCM SCM Evolution Supply Chain Flows Supply Chain Decision Process View of a Supply Chain Emerging Trends i & SCM help
55
• Increased levels of outsourcing – Multiple levels of outsourcing • Increased focus on customer intimacy – Proliferation of VMI/SMI/CMI programs • Increased focus on Tactical and Business planning – Higher value add planning processes • Increased focus on the complete value chain – More collaboration between strategic customers and suppliers • Demand shaping based on business strategy, manufacturing constraints, and inventory – Demand creation based on intelligent pricing tied to availability • Increased focus on CRD performance improvement – To maintain/increase market share • Tighter coupling between planning and execution – Exception based intervention in execution of plans
56
Issue
Extensive Capital Investment
Industry Response
Maximize capacity/equipment utilization across business divisions. Optimize profits based on product mix. Increased outsourcing.
SCM systems can do
Strategic Corporate Planning. Good procurement system Profit Optimization.
Increasing customer demands
Instant response to requests. Perfect delivery.
Integrated Planning & Fulfillment. Interactive delivery quoting.
Shrinking product life cycles
Shorter lead times and faster time to market. Reduce excess/obsolete Inventory.
Inventory planning.
57
Issue
Demand variability
Industry Response
Increased forecast accuracy Carefully managed response buffers Global penetration Cost effective operations Customer satisfaction
SCM Systems Can Do
Integrated Value Chain Planning.
Intense competition
Integrated Value Chain Planning. Customer Program Management. Inventory planning.
Long manufacturing cycle times
Strategic positioning of inventory along the supply chain
58
• Design and validate your supply chain strategy before you deploy – define scope and scale • Collaborate on demand and gain consensus for the most accurate forecast – execution • Collaborate, optimize, monitor and control, production, inventory, distribution and transportation simultaneously across multiple enterprises – global optimization • Execute, monitor, and review your SCM performance carefully with predefined KPI and objectives – operations evaluation
59
doc_542697986.pptx